In a move to enhance its artificial intelligence (AI) capabilities, Hewlett Packard Enterprise (HPE) is set to acquire networking gear manufacturer Juniper Networks in an all-cash deal valued at $14 billion.
According to a Reuters report, HPE’s offer of $40 per share to Juniper shareholders represents a substantial 32.4 per cent premium over Monday’s closing stock price.
This acquisition aligns with the ongoing AI-driven transformations in the tech industry, where companies are heavily investing in upgrading and expanding their AI portfolios.
HPE aims to leverage Juniper’s expertise in areas such as network security and AI-enabled enterprise networking operations (AIOps) to revitalise its networking business, which has faced challenges in the wake of sluggish demand and formidable competition.
The acquisition of Juniper Networks is expected to significantly bolster HPE’s networking business, marking a crucial step in addressing challenges faced in its traditional server business.
As the demand for AI technologies continues to surge, HPE aims to capitalise on Juniper’s capabilities to stay competitive in the dynamic tech landscape.
Juniper’s focus on network security and AIOps aligns well with HPE’s strategic objectives to enhance its AI offerings.
The $14 billion deal positions HPE for substantial growth and diversification, presenting an opportunity to tap into the burgeoning AI market.
Following the announcement of the acquisition, Juniper Networks experienced a modest 0.5 per cent increase in extended trading, while HPE’s stock remained largely flat.
The market’s response reflects a cautious yet optimistic outlook. The deal is anticipated to be accretive to HPE’s non-GAAP earnings and free cash flow within the first year post-completion.
J.P. Morgan Securities LLC and Qatalyst Partners are serving as financial advisors for HPE, indicating a strategic approach to the transaction.
The acquisition is expected to be financed through $14 billion in term loans, with the closing scheduled for late 2024 or early 2025, subject to regulatory approvals.
(With inputs from Reuters)
